Chapter 2



Chapter 2

B.) Strategy issues in org. –need a reason for their exsistence

1.) The business –What, Who and Why do you serve?, by understanding the business you can develop a mission

2.) The mission-a statement of the org scope often identifying it’s cust, mar, products, and tech and value also used with vision-inspirational theme (communicate through corporate level

3.) Org culture-Connect with cust and stakeholders

a.) stakeholder- are the people who are affected by what the company does and how well it performs, including employees, owners and board members, suppliers, distributors, unions, and local communities, cust

b.) org culture-exsist in the unit which is a set of values, ideas and attitudes that is learned and shared among the members of an org

4.) Goals/objective-convert the mission into targeted levels of performancr to be achieved often by a specific time

1. profit-higher return on it’s investment

2. market share—the ratio of sales reveneue of the firm to the total sales of the revenue of all the firms in the industry including the industry itself, can increase mar Share

3. sales- maintain sales through profitability may not ne maximized

4. quality-target highest quality

5. customer satisfaction-reason org exsist

6. employee welfare- commitment to employee opp. And working conditions

7. social responsibility—balance conflicting goals of the consumers, employees, and stockholders to promote overall welfare of all groups

II.) Setting Strategic Direction –involves 2 ?

A) A look around: where are we now?-indentify cust, competencies, and competitors, swot anaylsis, enviro scanning

1. Customer-strategic analysis must be cust focused and provide genuine value and benefits to present and prospective cust

2. Competencies-an org special capabilities including skills, tech, and resources that distinguish it from other org

a. should provide competitive advantage-a unique strength relative to competitors often based on quality time cost or innovation.

b. Total quality management (TQM)- here means those features and chara of a product that influence it’s ability to satisfy cust needs

1.) benchmarking-discovering how others do something better than your own firm so you can imitate or leapfrog competition(used to improve quality or reduce new product cycles often looking at different type of business cereals to racing)

3)Competitiors: (intertype)

B) Growth strategies:Where do we want to go? Aid in the movement

1. Business Portfolio analysis: uses qualified performance measures and growth targets to analyze a firms business units (Stragetic Bus Units SBU in the BCG analysis) as though they were a collection of separate investments

a.) vertical axis is the mar growth rate-annual rate of growth of the specific mar in which a given SBu is competing

Chapter 3 Scanning the Mar Enviro.

I. Enviro scanning: In the new millennium: Oppurtunities and threats

A. Enviro scanning: The process of continually aquiring info on events occurring outside the org to identify and interpet potential trends

a. Tracking enviro trends:

b. Five forces: social, economic, tech, competitive, and regulatory forces

1. social: demographic shifts, cultural changes

2. economic: macro conditions, consumser income

3. tech-changing tech, impact on cust value

4. competitive: alt. forms of competition, components of compet.

5.) regulatory: laws protecting comp, laws affecting mar mix, self regulation

c. involves explaining trends

B. enviro scan of todays mar place: `

a.) social forces: demographsics-describe a pop according to selected chara such as age, gender, ethnicity, income and occupation.

1. Two types of statistical areas

1.) metropolitan: has one urbanized area of 50,000 or more people and adjacent territory that has a high degree of social and economic integration

2. micopolitian: has one urban cluster of at least 10,000 but less than 50,000 and adjacent to territory with high social/eco integration

2.) multicultural marketing: combinations of the mar mix that reflect unique attitudes, ancestry communication preferences and lifestyle

3. Culture

4. change in gender roles

5. changing values-Value consciousness- the concern for obtaining the best quality features, performance of product/service for a given price will drive consumption behavior.

C. Economic forces: economy: income, expenditures, and resources that affect the cost of running a business and household.

1. macro conditions: the inflationary or recessionary state of the eco

a.) In inflationary: cost to produce and buy products/services increases and price increases, if price rises faster than consumer income, the number of items a consumer can buy decreases

\ b. recession: time of slow eco activity, business production decreases, unemployment rises, and many consumers have less money to spend

c. Consumer confidence index: consumer expectations , the higher the more favorable

2. Micro: Consumer income: a consumers ability to buy, related to income

a.gross income-total amount of money made a yr.

b. disposable income: the money a consumer has left over after paying taxes to usse for food, shelter, clothing, etc.

c. discretionary income: the money that remains after paying taxes, and necessities. Used for luxury items.

D. tech forces: inventions or innovations

1. Electronic: marketspace: an info and communication based electronic exchange envoi mostly occupied by sophisticated computer and telecommunication tech with digilized offerings.

b. electronic commerce: any activity that uses form of electronic communication in the inventory, exchange, advertisement..etc.

c. intranet-network inside of an org

d. extranet-allow comminucation between buyer and seller

E. Competitve forces:

1. Alt forms of competition 4 basic types

a. pure competition: every company has a similar product, distributation(shipping) is most important

b monopolistic comp: many sellers compete with their product on a substitutable basis (coffee and tea) coupons are main mark attack

c. Oliogopoly: common industry structure, when a few companies control the majority of industry sales (At&T and sprint) Price comp is not good for companies

d. pure monopoly-single seller

2. Components of comp-factors that drive comp, relate to mar mix decisions and can create barrier to entry, increase brand awareness, or fight for market share

a. Entry: additional producers lower prices, Barrier to entry: business practices or conditions that make it difficult for a new firm to enter, such as capital requirements, advertising expenditiures, product identity, etc.

b Power of buyer and suppliers: powerful buyer exsist when few in number, low switching cost, or product is significant share of buyers total cost. A supplier gains power when the product is critical to the buyer when it has built up the switching cost

c. Exsisting competitiors and substitutes: depend on industry growth, in slow growth more heated for market gain, high fixed cost create competitive pressures to fill production cost

d. Small businesses as competitors:

F. Regulatory forces: Regulation: consist of restrictions state anf federal laws place on business with regard to the conduct of it’s activities.

1. Protecting competition

a. Sherman anti-trust act (1890) forbids contracts, combinations, or conspiracies in trade or commerce, monopolies or attempts to monopolize any trade or commerce supplemented with the Clayton act (1914) forbids certain actions that are likely to lessen competition

b. Robinson-patman act 1936-unlawful to discriminate in prices charged to different purchasers of the same product, where it may lessen comp.

c. Company protection: patent: cannot copy invention, copyright: literature,songs, artistic stuff exclusive rights to print perform or copy. Digital copywright of digital products

d. Consumer protection: infant formula act, nutritional labeling and education act, Faor packaging and labeling act, child protection act, consumer product safety act,

1. Consumerism: a grassroot movement started in 1960’s to increase the influence, power and rights of consumers in dealing with institutions.

e. both consumer and company protection: Lanhma act 1946- trademark protection, word, name or symbol, cannot be generic, registration of trademark-but not ownership

2.Trademark law revision act: allows company to declare before actual use. Now including color along with the federal dilution act 1995-prevent trademark being used on a noncompeting product (Cadillac toothbrush)

f. Pricing-related legistration- 2 components

1. Price fixing (per se illegal)

2. price discounting: only certain allowed, quantity discounts, diff prices if diff manu or delivery cost, promotional allowances, meet competitors price “ in good faith””

g. Distrubition related legistration (Place in mar mix):

1. exclusive dealing: an arrangement a a manu makes with a reseller to handle only it’s products and not those of a competitors (illegal under clayton act)

2. Requirment contracts: require a buyer to purchase all or part of it’s needsa for a product from one seller for a period of a time – not always illegal depends on impact on distribution.

3. exclusive territorial distributorship: tying arrangement, seller requires the purchaser of one product to also buy another item in the line. Seller can restrain trade in the tied product

h. Advertising and promotion-related legistration monitiored by the federal trade commission which was established by the FTC ACT 191- deceptive or misleading advertising and unfair business practices and has power to cease and desist orders and order correct advertising which can cause companies to revise promotions

1. deceptive mail prevention and enforcement act 1999: specifications for direct-mail sweepstakes “no purchase neccassary”

2. telephone consumer protection act 1991- provides requirements for telemarketers , including fax promo, also do not call registry

3. childrens online privacy act 1998 and assulat of non-solicated porno and mar (CAN_SPAM) act 2004 restrict info collection and unsoliciated email promo on the internet

I) control through self-regulation- where an industry controls itself-two problems-noncomplicence by members and enfocrmcent-better business bureau

Chapter 4 ethics and responsible marketing

I)

Nature and the significance of mar ethics-ethics are the moral principles and values that govern the actions and decisions of an individual or group-serve as a guideline on how to act rightly and justly when faced with moral dileminas

A. Ethics/legal framework in mar

1. Laws- societys values and standards that are enforceable in courts

2. Current perception of ethical behavior is bad-4 reasons

1. increased pressure on business people to make descisions in a society chara by diverse values

2. growing tendency for busniness to be judged publiciy by groups with diff values and interest

3. public expectations of ethical business behavior has increased

4. ethical business conduct has declined

II)Understanding ethical mar behavior

A) Societal culure and norms affects business culture which affects exhange

B) Ethics of exchange-both parties better off

i. Caveat emptor-let the buyer beware

ii. Consumer bill of rights the right to

a. safety

b. to be informed

c, to choose

d. to be heard

iii. Slotting allowances by demanded by supermarkets- in the form of cash, free goods, to stock new new products

C) Ethics of competition

1.) economic espionage-is the collection of trade secrets or poprietar info about a companies competitor-illegal trespassing, theft, fraud, misrespensetation, wire-tapping, search of competitors trash, violation of written and implicit employee agreements with noncomplete cause

2. bribery and kickbacks- disguised as gifts, consultant fees and favors –monitored internationally by Transpareancy international-two laws address these pratices- Economic espionage act 1996 and foreign corrupt policies 1977

D. Business culture- comprises the effective rules of the game, the boundaries between competive and unethical behavior and the codes of conduct in business dealings

E. Corporate culture and expectations: is a set of values, ideas and attitudes that is learned and shared among the members of an org

F. Code of ethics: formal statement of ethical principles and rules of conduct

G. Ethical behavior of top mangament and co-workers

1. Whistle blowers- employees who report unethical behavioror illegal actions of their employees

H. Personal moral philosophy and ethical behavior:

1. Moral idealism- personal moral philosophy that considers certain individual roghts or duties as uiniversal, regardless of the outcome.

2. Utilitarianism-personal moral philosophy that focuses on the greatest good for the greatest number, by assessing the cost and benefits of the consquences of ethical behavior, if the benefits exceeds the cost then the behavior is ethical.

III. Understanding Social responsibility in mar –social respon-means that the org are part of a larger society and are accountable to the society for their actions

A.Concepts of social responsibility- 3

1. Profit responsibility- companies have a simple duty- to maximize their profits for their owners or stakeholders.

2. Stakeholder responsibility: the obligation an org has to those who can affect achievement of it’s objectives. –consumers, employees, etc

3. Societal responsibility: obligations that an org have to

1. the preservation of the ecological enviro

2. to the egeneral public

1. have responded with greenmarketing-efforts to produce promote and reclaim enviro sensitive products.

a. iso 14000-worldwide standards for enviro quality and green mar practices

b. cause mar-charitable contributions of a form are tied directly to the customer revenue produced through the promo of one if it’s profucts, incorpotates all three social concepts.

4. The social audit: doing well by doing good-systematci assessment if a firms objective, strategies and performance in terms of social responsibility, consist of 5 steps

1. Recognition of the firms social expectations and the rationale for engaging in the social responsibility endeavors

2. identification of social responsibility causes or programs consistent with the companys missions

3. determinitaion of a org objectives and priorites for programs and activities it will undertake

4. specicification of the type and amount of tresources neccassary to achieve social responsibility objectives

5. evaluation of social responsibility programs and activities undertaken and assessment of future inmvolvement

1. corporate attention will increase to social AUDITS As companies seek to achieve sustainable development-conducting business in a way that protects the natural enviro while making eco progress. These companies benefit from from favorable word of mouth and typically out-perform less responsible companies in finances

5. Turning the table” consumer ethics and social responsibility-

A. influenced by

1. a belief that a consumer can get away with the act and it’s worth doing

2. the rationalization that the act is justified or driven by forces outside the individual

b. Enviroment

1. unwilling to sacrifice convience and pay higher prices to protect enviro

2. lack the knowledge to make informed decisions dealing with the purchase use, and disposition of products.

Chapter five Consumer Behavior

I. Getting to know the auto customher and influencher

A. Mostly women –consumer behavior-the action a person takes in purchasing and using products and services

II. Consumer purchase decision (PD) process-five stages

1. problem reconigition: the intial step in the PD is periecieving a diff between a persons ideal and actual situation big enough to trigger a decision. –show shortcoming of old products

2. Information search: seeking value-search for info

a. Internal search: scan memory for previous experience with product or brand

b. External search: especially needed when no prior info, risk of wrong purchase high, cost of gathering info low,

1. personal source: relatives and friends

2. public sources: consumer reportd, gov agencies, consumer programs

3. marketer dominated sources: info from sellers including adver, websites, salespeople, point of purchase displays in store

3. Alternative evaluation: assessing value: (3)

a. Suggesting criteria to use for the purchase,

b. Yielding brand names that might meet the criteria to use for purchase

c. Developing consumer value perceptions

d. Evaluative criteria- objective attributes of a brand and the subjective ones you use to compare different products and brands

1. consideration set-the group of brands that a consumer would consider acceptable feom among all the brands in the product class

4. Purchase decision: buying value: From whom to buy and when to buy- factors that affect purchasing-time pressure, finances

5. Postpurchase behavior-Value in consumption or use-after buying consumer compares with expectations. If dissatisfied the nar must decide whether the product was bad, or consumer expect to high. Affects consumer value perceptions, affects communication and repeat purchasing.

a. cognitive dissonance-post-purchase psychological tension or anxiety, use follow up calls to alleviate this.

6. Involvement and problem solving variations- depends on involvement-the personal, social, and eco significance of the purchase to the consumer.

a. High involvement-3 chara

1. is expensive

2. can have serious personal consquences

3. could reflect on ones social image

4. engage in extensive info search

b. Extended problem solving- each of five stages used, effort on research-automobiles

c. Limited problem solving-seek some info, rely on friend opinion, several brands eval, toaster, resturuant, little time and effort

d. Rountine problem solving-table salt, milk recognize problem, seek little info, virtually a habit.

7. Involvement and mar strategy:

a. low involvement, market leader focused on maintaining quality, avoiding stock outs to avoid substitution, advertising messages that reinforce a consumers knowledge or assures buyers made right choice, market competition focus on breaking habit with coupons, samples, and rebates,

8. Hogh involvement-comparative advertising

9. Situational influences: purchase situation affects purchase decision process- five situational influences:

1. the purchase task-reason for purchase

2. social surroundings— people present

3. physical surroundings-music, crowding

4. temporal effects –time of day

5. antecedent states-consumer mood, cash on hand

IV. Psychological influences on consumer behavior-why consumers behave the way they do

A. motivation and personality-

1. motivation-energizing force that stimulates behavior to satisify a need (hierarchy)

2. Personality-a persons consistent behavior or response to recurring situations

a. national-diff culture have diff personality chara

b. self concept- the way people see themselves, and the way they believe others seem them.

3. Perception: the process by which an individual selects, organizes, and interpets info to create a meaningful pic of the world.

a. selective perception: a filtering of exposure, comprehension, and retention.

b. selective exposure- occurs when people pay attention to messages that are consistent with their attitudes and beliefs and ignore messages that are inconsistent-postpurchase stage, and when a need exsist.

c. selective comprehension-interpeting info so that it is consistent with your attitudes and beliefs.

d. Selective retention: consumers do not remember all the info they see, read or hear. ‘

e. subliminal perception-means that you see or hear messages without being aware of them.

4. Percieved risk-represent the anxieties felt because the consumer cannot anticipate the outcomes of a purchase but believe that there may be negative consequences. Cost, physical harm, performance of product, the greater the risk the more info search.

5. learning- relate from repeated experience, and reasoning.(habit forming)

a. Behavioral learning-process of developing automatic responses to a situation built up through repeated exposure to it. Drive (need), cue(stimulus), response(action), and reinforcement(reward)

1. stimulus generalization-a reponse generated by one stimulus, same brand name for different products (Tylenol pm and Tylenol cold and flu

2. stimulus driscrimination-a persons ability to perceive differences in stimuli (difference in light beers),

b. cognitive learning-thinking, reasoning, and mental problem solving-reptition in adversting (advil-headache medicine)

6. Brand loyalty-favorable attitude toward and consisten purchase of a single brand ober time

7. Values beliefs and atiitudes, changing

1. changing belief about extent to which brand as certain attributes

2. changing the perceived importance of attributes

3. adding bew attributes to the product

8. Lifestyle

1. psychographics-pyschology, lifestyle, demographics. Vals system-identifies 8 consumer segments based on

a. their primary motivation for buying and having certain products and services

b. their resources-psychological, physical, demographic, and material capacities such as income, self condifidnce, AND risk taking

1.inspired by ideals, achievement and self-expression

V. Sociocultural influences on consumer behavior—evolve from people formal and informal relationships

A. Personal influence: 2

1. Opinion leaders-knowledgeable about or users of particular products

2. word of mouth-involves trustworthy friends

B Reference groups-are people whom an individual looks as a basis for self appraisal or as a source of personal standards. –influence brand chosen 3 specific groups

1. membership group: belongs to group, frat etc.

2, aspirational group: one a person wishes to be apart of

3. dissociative group-one a person wishes to remain a distance from bc of values

C. Family influence: 3 sources

1. Consumer socialization-process by which people acquire the skills, knowledge and attitudes neccassary to function as consumers children learn how to purchase by

a. interacting with adults in purchase situation

b their own purchasing and product usage experiences, brand preference at age 2

2. Family life cycle-describes the distinct phases that a family progresses through from formation to retirement

1. young singles-nondurable goods, young married-furniture

D. Family decision making five roles exsist-spouse dominant, or joint decision making(increases with education )

1. Info gatherer

2. influencer

3. decision maker

4. purchaser

5. user

E. Social class-relatively permanent homogenous divisions in a society into which people sharing similar values, interest and behavior, occupation, source of income and education

F. Culture and Subculture-minorities

a. African Americans have 2nd highest buying power of 3 racial subgroups

Chapter 6 Org Mar and buyer behavior

I Buying paper is a strategic business decision at JCPENNy

II. The nature and size of org mar-

A. Business mar- the mar of goods and services to companies, gov, not for profit for use in the creation of goods and services they can produce and mar to others

B. organizational Buyers-are those manu, wholesaler, retailer and gov agencies that buy goods and services for resale divided into 3 mar

1. Industrial firms- reprocess a product or service they buy before selling it

2. reseller mar-buy products and resell them without any reprocessing (wholeseller, retailers)

3. Gov units-are the federal, state and local agencies that buy goods and services for the constituents they serve

C. Global org mar-organization selling internationally

II Measuring domestic and global industrial resller and gov mar-

A.North American Classifaction System (NAICS) provides common industry definitions for Canada, usa, and mexico.-global economic activity. Allows studies of mar share, demand for goods/services, import competition in domestic mar. designates industries with a numerical code in a defined structure, 6 digits.

III. Characteristics of Org Buying-effective mar programs

A. Demand chara-consumer demand for products and services is affected by their price and availability and by consumers personal taste and discretionary income. Industrial demand is derived. Derived demand-the demand for industrial products and services is driven by or derived by, of derived from demand for consumer products and services

B. Size of the order or purchase: much larger than in consumer buying. Most org place constraints on their buyers in the form of purchasing policies or procedures.

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